Average Snow Fall

Northern Oil and Gas: A Good Response to Second Quarter Results

Northern Oil and Gas ( NOG ) had a good response to its second quarter earnings announcement. NOG did not have great numbers as it earned 33 cents/share in the second quarter, but 21 cents was unrealized gains on derivative instruments. NOG missed on both the bottom and top line as revenues were $35.5 million versus the Street's $39.07 million. The Street also expected earnings of 19 cents/share.

This was the fourth straight quarterly earnings miss and could make it difficult to make this year's earnings estimates of 89 cents/share. NOG traded as high as $18.96/share yesterday, but pulled back with the market after the Fed statement. Net income increased 30% quarter over quarter. Production volumes increased 12.5% quarter over quarter. Average daily production was 4,400 Boepd in the second quarter with 5,200 Boepd the average for June. This increase duplicates what many companies have said in the Williston Basin. April and May were slow months due to flooding in North Dakota and Montana. The large increase in production for June shows production is coming back on line.

NOG reaffirmed it will spud 40 net wells in 2011. The story for next quarter may have to do with hedged oil. As of June 30th, NOG had a total volume on open commodity swaps of 1.447 million barrels of oil at a weighted average price of approximately $88.13. It had 243,000 barrels of crude oil collared between $85 and $101.75. NOG plans to spend $20 million per quarter on acreage acquisitions. In the second quarter it purchased 12,767 net acres at an average cost of $1,995/acre. Although the numbers were not great for this company, its move in stock price has more to do with forward expectations. Northern Oil and Gas managed to keep costs in check, has hedged a large portion of production, is adding acres at low prices, has had some very good well results, and was oversold. Since most of the oil players in the Bakken had a difficult second quarter, NOG as a non-operator also did. The third quarter is looking very good for the Williston Basin, and because of this NOG should benefit.

Abraxas ( AXAS ) missed earnings estimates for the second quarter. Its numbers were received well given that its share price was up significantly. Abraxas posted EPS at 1 cent/share versus the Street's estimate of 5 cents/share. Revenues were $17 million versus the Street's $18.9 million. With unrealized mark to market hedges, Abraxas posted 10 cents/share. Abraxas reiterated difficulties associated with heavy snowfall that resulted in heavy flooding around its acreages in the Rocky Mountain region. This reduced production by approximately 100 Boepd. Abraxas announced results of its Stenehjem well in McKenzie County which was good. Abraxas has also been busy and should be able to increase production significantly through 2011. Abraxas also has acreage in the Niobrara, Eagle Ford, West Texas and Canada. July production increased from 3,845 Boepd in the second quarter, to 4,160 Boepd. Although Abraxas missed earnings, it had good drilling results and outlook.

Winter dropped less-than-average snowfall on Harrisburg, weather ...

The Harrisburg region will receive about 6 to 10 inches of total snow accumulation during the latest winter storm. With his dog, Penny, at his side, George Lyons shovels the snow off the driveway of his East Pennsboro Twp. home. Lyons, whose foot condition keeps him from walking around too much, said he was getting tired of being inside and wanted to get out and take care of the snow.

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